Yes, it is yet another story of the big one is on its way. This time it’s from George Will.
Will rightly mocks Donald Trump’s boast that the 4.1 percent growth in the second quarter was extraordinary. Following Nobel laureate Robert Shiller, Will tells readers:
“…since quarterly gross domestic product enumeration began in 1947, there have been 101 quarters with growth at least equal to the 4.1 percent of this year’s second quarter. The fastest — 13.4 percent — was 1950’s fourth quarter, perhaps produced largely by bad news: The Cold War was on, the Korean War had begun in June, and fear of the atomic bomb was rising (New York City installed its first air-raid siren in October), as was (consequently) a home-building boom outside cities and ‘scare buying’ of products that might become scarce during World War III. Today, Shiller says, ‘it seems likely that people in many countries may be accelerating their purchases — of soybeans, steel and many other commodities — fearing future government intervention in the form of a trade war.’ And fearing the probable: higher interest rates.”
Hate to spoil the fun, but actually the fastest quarter of growth since 1947 was in the second quarter of 1978 when the economy grew at a 16.4 percent annual rate. I don’t recall any imminent threats of nuclear war or other really bad things at the time that could spur this growth. The fact that the second quarter figure for this year was somewhat of an aberration is likely true, but people are spending some of the tax cut. (Yes, it mostly went to the rich. But they know how to spend money also, even if they spend a smaller share of the tax cut than middle- or lower-income families.)
The more general point in Will’s piece is that the recovery has gone on for a long time and we will have another recession. These are valid points, but nothing he says in the piece provides evidence for an “epic economic collapse.”
He seems to think the high debt and deficits will somehow make the next recession especially bad but doesn’t connect any dots. There may be political obstacles to spending the money needed to boost the economy out of a recession, but that would just be the result of Republicans trying to make a Democratic president suffer politically for a bad economy. This would be the case even if the national debt was zero.
In terms of the economics, Japan has a debt-to-GDP ratio that is nearly twice as large as the US ratio and can still borrow long-term at near zero cost and has an inflation rate of less than 1.0 percent. So we get that people like George Will might be aesthetically opposed to government debt, but there is no economic reason for us to think that we will not be able to spend the money needed to boost the economy out of the next recession.
Yes, it is yet another story of the big one is on its way. This time it’s from George Will.
Will rightly mocks Donald Trump’s boast that the 4.1 percent growth in the second quarter was extraordinary. Following Nobel laureate Robert Shiller, Will tells readers:
“…since quarterly gross domestic product enumeration began in 1947, there have been 101 quarters with growth at least equal to the 4.1 percent of this year’s second quarter. The fastest — 13.4 percent — was 1950’s fourth quarter, perhaps produced largely by bad news: The Cold War was on, the Korean War had begun in June, and fear of the atomic bomb was rising (New York City installed its first air-raid siren in October), as was (consequently) a home-building boom outside cities and ‘scare buying’ of products that might become scarce during World War III. Today, Shiller says, ‘it seems likely that people in many countries may be accelerating their purchases — of soybeans, steel and many other commodities — fearing future government intervention in the form of a trade war.’ And fearing the probable: higher interest rates.”
Hate to spoil the fun, but actually the fastest quarter of growth since 1947 was in the second quarter of 1978 when the economy grew at a 16.4 percent annual rate. I don’t recall any imminent threats of nuclear war or other really bad things at the time that could spur this growth. The fact that the second quarter figure for this year was somewhat of an aberration is likely true, but people are spending some of the tax cut. (Yes, it mostly went to the rich. But they know how to spend money also, even if they spend a smaller share of the tax cut than middle- or lower-income families.)
The more general point in Will’s piece is that the recovery has gone on for a long time and we will have another recession. These are valid points, but nothing he says in the piece provides evidence for an “epic economic collapse.”
He seems to think the high debt and deficits will somehow make the next recession especially bad but doesn’t connect any dots. There may be political obstacles to spending the money needed to boost the economy out of a recession, but that would just be the result of Republicans trying to make a Democratic president suffer politically for a bad economy. This would be the case even if the national debt was zero.
In terms of the economics, Japan has a debt-to-GDP ratio that is nearly twice as large as the US ratio and can still borrow long-term at near zero cost and has an inflation rate of less than 1.0 percent. So we get that people like George Will might be aesthetically opposed to government debt, but there is no economic reason for us to think that we will not be able to spend the money needed to boost the economy out of the next recession.
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I was involved in an exchange on the extent to which economic factors, as opposed to racism, sexism, and xenophobia, played a role in Trump’s election. While this is probably not a good way to spend one’s time I kept trying to make a point that as best I can tell everyone is ignoring.
Due to worsening conditions for the working class (defined here as people without a college degree), the rate of educational upgrading has slowed dramatically over the last four decades. If we continued to see the same rate of increase in college graduation rates in the years since 1979, as we did in the years from 1959 to 1979, we would have far more college educated people and far fewer people without college degrees.
This means that even if there were zero change in the attitudes and voting behavior of white working class people, there would have been many more votes for Clinton and fewer for Trump since there would be fewer white people without college degrees and more with college degrees.
Yes, this is incredibly simplistic, but if there is something wrong with the logic, no one has bothered to tell me what it is. (Here is the earlier post I did with Sarah Rawlins for folks who want to check the numbers.)
I was involved in an exchange on the extent to which economic factors, as opposed to racism, sexism, and xenophobia, played a role in Trump’s election. While this is probably not a good way to spend one’s time I kept trying to make a point that as best I can tell everyone is ignoring.
Due to worsening conditions for the working class (defined here as people without a college degree), the rate of educational upgrading has slowed dramatically over the last four decades. If we continued to see the same rate of increase in college graduation rates in the years since 1979, as we did in the years from 1959 to 1979, we would have far more college educated people and far fewer people without college degrees.
This means that even if there were zero change in the attitudes and voting behavior of white working class people, there would have been many more votes for Clinton and fewer for Trump since there would be fewer white people without college degrees and more with college degrees.
Yes, this is incredibly simplistic, but if there is something wrong with the logic, no one has bothered to tell me what it is. (Here is the earlier post I did with Sarah Rawlins for folks who want to check the numbers.)
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Seriously, at least when it comes to its own productions, in this case, a documentary on Michael Jackson. It’s a great example of how the only principle that matters is making the rich richer.
Seriously, at least when it comes to its own productions, in this case, a documentary on Michael Jackson. It’s a great example of how the only principle that matters is making the rich richer.
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The Washington Post reported on Sarah Huckabee Sanders apology for saying that Trump had created more jobs for blacks in the first 20 months of his administration than Obama had in eight years. It then reported on her correction that in the first 20 months, dating from the election, Trump had created more jobs.
While the piece noted that economists think the president’s ability to affect the economy is limited, it would have been worth mentioning that the economy was in a free fall, losing 700,000 jobs a month at the time Obama was elected. The stimulus that he pushed through Congress first began to have an effect in April, and by the summer, the job loss had stopped. If anyone wants to make a serious comparison, this background is important.
The Washington Post reported on Sarah Huckabee Sanders apology for saying that Trump had created more jobs for blacks in the first 20 months of his administration than Obama had in eight years. It then reported on her correction that in the first 20 months, dating from the election, Trump had created more jobs.
While the piece noted that economists think the president’s ability to affect the economy is limited, it would have been worth mentioning that the economy was in a free fall, losing 700,000 jobs a month at the time Obama was elected. The stimulus that he pushed through Congress first began to have an effect in April, and by the summer, the job loss had stopped. If anyone wants to make a serious comparison, this background is important.
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That’s the question millions are asking after reading this NYT profile of France’s labor minister, Muriel Pénicaud. The largely positive piece refers to France’s “famously voluminous labor code,” then goes on to tell readers:
“The campaign to renew the French economy, one of President Emmanuel Macron’s flagship policies, involves steering toward a Nordic-style labor model known as “flexible security.” The changes aim to rebalance the welfare state by creating more flexibility for companies to hire and fire, while offering greater training and support to help workers transition to new jobs.”
This is of course how President Macron is describing his agenda. While the description may actually reflect his goals, it may also be a cover for a different agenda. France stands out among major OECD countries in limiting the growth in inequality over the last four decades.
Its economy has also not performed especially poorly. While it does have a high youth unemployment rate (which is cited in this piece), the number is deceptive. A much higher percentage of French youth choose not to work because university tuition is nearly free and the government gives stipends to students to cover living expense.
The share of French young people who are unemployed is actually very close to the rates in the United States, but it translates into a much higher unemployment rate because so many fewer French youth are working. For prime-age workers (ages 25 to 54), according to the OECD, France’s employment rate is actually slightly higher than in the United States, 80.4 percent in France, compared to 79.3 percent in the United States.
In short, France’s economy is not obviously in any sort of crisis. There are certainly ways that its economy can be improved with reforms, and perhaps this is Macron’s real agenda. However, it is also possible that he wants to bring about the same sort of upward redistribution in France that we have seen in other wealthy countries.
If that were the case, it is unlikely that Macron would announce an agenda for the purpose of giving more money to rich people. It is more likely he would have some cover, like modernizing France’s labor law.
It would be best if NYT news articles just reported on what politicians say and do and not try to tell its readers their real motives.
That’s the question millions are asking after reading this NYT profile of France’s labor minister, Muriel Pénicaud. The largely positive piece refers to France’s “famously voluminous labor code,” then goes on to tell readers:
“The campaign to renew the French economy, one of President Emmanuel Macron’s flagship policies, involves steering toward a Nordic-style labor model known as “flexible security.” The changes aim to rebalance the welfare state by creating more flexibility for companies to hire and fire, while offering greater training and support to help workers transition to new jobs.”
This is of course how President Macron is describing his agenda. While the description may actually reflect his goals, it may also be a cover for a different agenda. France stands out among major OECD countries in limiting the growth in inequality over the last four decades.
Its economy has also not performed especially poorly. While it does have a high youth unemployment rate (which is cited in this piece), the number is deceptive. A much higher percentage of French youth choose not to work because university tuition is nearly free and the government gives stipends to students to cover living expense.
The share of French young people who are unemployed is actually very close to the rates in the United States, but it translates into a much higher unemployment rate because so many fewer French youth are working. For prime-age workers (ages 25 to 54), according to the OECD, France’s employment rate is actually slightly higher than in the United States, 80.4 percent in France, compared to 79.3 percent in the United States.
In short, France’s economy is not obviously in any sort of crisis. There are certainly ways that its economy can be improved with reforms, and perhaps this is Macron’s real agenda. However, it is also possible that he wants to bring about the same sort of upward redistribution in France that we have seen in other wealthy countries.
If that were the case, it is unlikely that Macron would announce an agenda for the purpose of giving more money to rich people. It is more likely he would have some cover, like modernizing France’s labor law.
It would be best if NYT news articles just reported on what politicians say and do and not try to tell its readers their real motives.
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No, I’m not being a Trump cheerleader, I am just looking at the numbers. This piece in the Washington Post noted the lack of real wage growth and indicated the future prospects were dubious.
The year-over-year rate of inflation was 2.9 percent in July, slightly exceeding the 2.7 percent rate of growth in the average hourly wage. However, this figure was inflated by jumps in oil prices last August and September. In the next two months, these jumps fall out of the 12-month window.
If we assume that inflation will be 0.2 percent in each of the next two months, and the 12-month rate of growth of nominal wages remains at 2.7 percent, year-over-year real wage growth will be very slightly positive next month and will be 0.3 percent in September. That is hardly great wage growth, but it is positive. That is not much for Trump to brag about, but it would be wrong to say that real wages are stagnant.
It is also worth noting that the 3.1 percent growth rate projected for 2018 by the Congressional Budget Office (CBO), which is the headline of the piece, is the same growth rate it projected in the Budget and Economic Outlook released in April. People reading the piece may wrongly conclude that CBO had revised its projection upward.
No, I’m not being a Trump cheerleader, I am just looking at the numbers. This piece in the Washington Post noted the lack of real wage growth and indicated the future prospects were dubious.
The year-over-year rate of inflation was 2.9 percent in July, slightly exceeding the 2.7 percent rate of growth in the average hourly wage. However, this figure was inflated by jumps in oil prices last August and September. In the next two months, these jumps fall out of the 12-month window.
If we assume that inflation will be 0.2 percent in each of the next two months, and the 12-month rate of growth of nominal wages remains at 2.7 percent, year-over-year real wage growth will be very slightly positive next month and will be 0.3 percent in September. That is hardly great wage growth, but it is positive. That is not much for Trump to brag about, but it would be wrong to say that real wages are stagnant.
It is also worth noting that the 3.1 percent growth rate projected for 2018 by the Congressional Budget Office (CBO), which is the headline of the piece, is the same growth rate it projected in the Budget and Economic Outlook released in April. People reading the piece may wrongly conclude that CBO had revised its projection upward.
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That might have been worth mentioning in this NYT piece on Wisconsin’s political situation. The piece notes the conservative policies put in place by the state’s Republican governor, Scott Walker. It then notes that the unemployment rate has fallen below 3.0 percent.
In this context, it might have been worth mentioning that Minnesota, Wisconsin’s neighboring state, has an unemployment rate of 3.1 percent. Minnesota has been led by a liberal Democrat. This suggests that Wisconsin’s relatively strong labor market might be more the result of regional factors than Mr. Walker’s policies.
That might have been worth mentioning in this NYT piece on Wisconsin’s political situation. The piece notes the conservative policies put in place by the state’s Republican governor, Scott Walker. It then notes that the unemployment rate has fallen below 3.0 percent.
In this context, it might have been worth mentioning that Minnesota, Wisconsin’s neighboring state, has an unemployment rate of 3.1 percent. Minnesota has been led by a liberal Democrat. This suggests that Wisconsin’s relatively strong labor market might be more the result of regional factors than Mr. Walker’s policies.
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Politicians like to take credit for things they have little to do with it. Serious newspapers point this fact out when it happens.
The Washington Post fell down on the job in a piece that quoted Wisconsin governor Scott Walker saying, “There are more people in the workforce in Wisconsin than ever before in the history of the state.”
This is a pretty empty claim since it will be true most of the time (except recessions) for most states. Since populations generally grow, unless there is a downturn, in most months the state will have more people in the workforce than ever before.
A more serious analysis would look at the percentage of the population in the workforce. This is not at an all-time high. In June, 54.6 percent of Wisconsin’s population was in the workforce. This compared to more than 55.0 percent in 2000.
It is possible that this drop is explained by demographic changes (more older people and children today), but the percentage of people in the workforce would be the real question, not the number. The Post should have pointed this out to its readers so they would not be deceived by Walker’s nonsense boast.
Politicians like to take credit for things they have little to do with it. Serious newspapers point this fact out when it happens.
The Washington Post fell down on the job in a piece that quoted Wisconsin governor Scott Walker saying, “There are more people in the workforce in Wisconsin than ever before in the history of the state.”
This is a pretty empty claim since it will be true most of the time (except recessions) for most states. Since populations generally grow, unless there is a downturn, in most months the state will have more people in the workforce than ever before.
A more serious analysis would look at the percentage of the population in the workforce. This is not at an all-time high. In June, 54.6 percent of Wisconsin’s population was in the workforce. This compared to more than 55.0 percent in 2000.
It is possible that this drop is explained by demographic changes (more older people and children today), but the percentage of people in the workforce would be the real question, not the number. The Post should have pointed this out to its readers so they would not be deceived by Walker’s nonsense boast.
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Austin Frakt had an NYT Upshot piece complaining that the cost of the Medicare prescription drug plan to taxpayers has been soaring:
“But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase.”
This is a peculiar complaint because the plan is actually costing the government far less than had been projected. The 2004 Medicare Trustees report projected that Part D would cost 1.01 percent of GDP in 2015 and rise to 1.31 percent of GDP in 2020 (Table II.C21). If we interpolate, that means the plan should have cost 1.13 percent of GDP in 2017. That would come to roughly $250 billion.
The 2018 report shows that Part D cost $100 billion in 2017 (Table III.D1), less than half of what had been projected in 2004. The main reason for the lower than projected expenditures is that drug costs have increased far less than had been expected, primarily due to a slowdown in the development and approval of new drugs.
In any case, if there are any surprises with the Medicare drug program it has been the slower the projected growth of costs, not the opposite.
Austin Frakt had an NYT Upshot piece complaining that the cost of the Medicare prescription drug plan to taxpayers has been soaring:
“But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase.”
This is a peculiar complaint because the plan is actually costing the government far less than had been projected. The 2004 Medicare Trustees report projected that Part D would cost 1.01 percent of GDP in 2015 and rise to 1.31 percent of GDP in 2020 (Table II.C21). If we interpolate, that means the plan should have cost 1.13 percent of GDP in 2017. That would come to roughly $250 billion.
The 2018 report shows that Part D cost $100 billion in 2017 (Table III.D1), less than half of what had been projected in 2004. The main reason for the lower than projected expenditures is that drug costs have increased far less than had been expected, primarily due to a slowdown in the development and approval of new drugs.
In any case, if there are any surprises with the Medicare drug program it has been the slower the projected growth of costs, not the opposite.
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I see that Glenn Kessler, the Washington Post fact checker, is being pretty liberal in dishing out the Pinocchios over Democrats’ claim that a study from a right-wing think tank found that a Medicare-for-all system would save $2 trillion over the course of the decade. Kessler’s main complaints are that these savings assume that providers accept a 40 percent reduction in payments and that Democrats’ have ignored the study’s projection that Medicare-for-all would add $32.6 trillion to the federal budget over the decade. For these omissions, Kessler awarded three Pinocchios. This seems excessive to me.
First, Kessler argues that a 40 percent reduction in payments to providers is unrealistic. This is true, based on the historic balance of power in these debates where doctors hospitals, drug companies, and medical equipment suppliers all have very powerful lobbies. But if there was a committed majority in Congress for providing universal Medicare, it is possible that these lobbies could be defeated.
In this context, it would be helpful to point out that providers in other wealthy countries do get 40 percent, and sometimes even 50 percent or 60 percent less than providers in the United States. There is little doubt that providers would scream bloody murder over the prospects of large pay cuts, but what would be their option if there was the political will? Would doctors change careers and become shoe salespeople?
Kessler is, of course, right that the study projected a large increase in government spending under Medicare-for-all, and that was its main point. This does raise important political problems, but the biggest chunk of this increase comes from replacing employer payments for insurance with government payments. Would people really be that upset if the money that their employer sent to an insurance company was instead sent to the government to pay for health care?
It seems to me that the prospect of saving $2 trillion over a decade (roughly $15,000 per household) might be worth having more money go through the government. That is, of course, unless one has an ideological distaste for the government or wants to see insurers, drug companies, doctors, and equipment suppliers have more money.
As an economist and certified numbers geek, I can sympathize with Kessler’s complaint that the Democrats aren’t giving the full story. But is this really a three Pinocchio offense when we have many leading politicians, like the president, who literally just make things up and just deny well-established facts?
I see that Glenn Kessler, the Washington Post fact checker, is being pretty liberal in dishing out the Pinocchios over Democrats’ claim that a study from a right-wing think tank found that a Medicare-for-all system would save $2 trillion over the course of the decade. Kessler’s main complaints are that these savings assume that providers accept a 40 percent reduction in payments and that Democrats’ have ignored the study’s projection that Medicare-for-all would add $32.6 trillion to the federal budget over the decade. For these omissions, Kessler awarded three Pinocchios. This seems excessive to me.
First, Kessler argues that a 40 percent reduction in payments to providers is unrealistic. This is true, based on the historic balance of power in these debates where doctors hospitals, drug companies, and medical equipment suppliers all have very powerful lobbies. But if there was a committed majority in Congress for providing universal Medicare, it is possible that these lobbies could be defeated.
In this context, it would be helpful to point out that providers in other wealthy countries do get 40 percent, and sometimes even 50 percent or 60 percent less than providers in the United States. There is little doubt that providers would scream bloody murder over the prospects of large pay cuts, but what would be their option if there was the political will? Would doctors change careers and become shoe salespeople?
Kessler is, of course, right that the study projected a large increase in government spending under Medicare-for-all, and that was its main point. This does raise important political problems, but the biggest chunk of this increase comes from replacing employer payments for insurance with government payments. Would people really be that upset if the money that their employer sent to an insurance company was instead sent to the government to pay for health care?
It seems to me that the prospect of saving $2 trillion over a decade (roughly $15,000 per household) might be worth having more money go through the government. That is, of course, unless one has an ideological distaste for the government or wants to see insurers, drug companies, doctors, and equipment suppliers have more money.
As an economist and certified numbers geek, I can sympathize with Kessler’s complaint that the Democrats aren’t giving the full story. But is this really a three Pinocchio offense when we have many leading politicians, like the president, who literally just make things up and just deny well-established facts?
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